Youth unemployment - more bureaucracy to be avoided. After the 2014-2020 financial framework and the common agricultural policy reform (see this column yesterday), other aspects of the developments seen last week and the results of the European Council deserve a few words. The effort to fight youth unemployment, through an overall approach financed by the EU in 2014 and 2015, is particularly noteworthy - it is ambitious and the budget is considerable. It involves at least 32 regions in the EU where youth unemployment exceeds acceptable limits.
Yet there is a risk. The chosen mechanism opens up four possibilities for under-25 year olds in search of a job: (i) an available job - if there is one; (ii) training; (iii) an apprenticeship; (iv) a traineeship. This is all well and good - but the danger is that the planned financing might be absorbed in particular by the creation of the mechanism and the way it works. How many new jobs will actually be created?
This question mark is the reason why I expressed my preference last month for the model of the agreement between Berlin and Madrid, which is based on the prior learning of the German language in Germany and on the preparation for an available job in Germany itself, with the direct cooperation of businesses that are in search of labour. The chances of a positive outcome are thus real, thanks to a minimum of bureaucracy and specific preparation.
The EU project focuses on the breadth of budgetary commitment and on its ready availability - the first two years of the seven year financial perspectives. The amount allocated to the system must essentially be used for financing the training, apprenticeship or traineeships. Yet, these instruments can't just be cobbled together. Do they really exist in the 32 regions that will benefit from the financing? How will the training and the apprenticeship be able to correspond to real demand, which is generally to be found in a member state that is far away from the young job applicants? The applicants can't learn all the Community languages… The danger is the creation of more heavy bureaucracy, far away from the areas where the job is available.
Bank monitoring and discipline. The responsibility of the banking world for the EU's difficulty did not need further proof. Anyone not yet convinced of this should take a quick look at the behaviour of Ireland's Anglo-Irish Bank, which in 2008 requested public support in order to avoid bankruptcy. It first requested €7 billion. The Irish Independent newspaper last week published the conversation between the bank's directors who were defining the strategy. In fact they were looking for much more than the planned €7 billion. Their tactic was to draw the authorities into the trap, asking for an initial cheque that was considerable but still reasonable. “They should then continue to finance us so that they don't lose their first payment”, the directors schemed. And the €7 billion gradually became around €30 billion! Ireland thus ended up with a colossal debt, which obliged it to ask for the EU aid that Dublin has still not finished repaying - with enormous sacrifices for the whole population.
Of course, banks that behave properly do exist as well - but it is all the more evident that discipline, along with bank monitoring, is needed. Banks are crucial for collecting savings and financing economic activity. The formula consisting of nationalising them all does not work because each choice and decision of a bank would then depend on the political world, on alliances between parties, on the trading of favours, and the fate of an election. What is therefore needed is to restructure what already exists - and this is a long and complicated job. It is under way, however, and last week's summit affirmed this. The link between bank crisis and public debt needs to be broken, said Ireland's Prime Minister Enda Kenny (and this is understandable). A timetable for this exists, with several deadlines, but it will only come to an end next year. We're making progress. Even in the UK abuse is punished hard - and this, despite the importance of the City. The court cases are slow but they are doing their job. Elsewhere, new banking discipline is not exclusively for the EU - it often has to be worldwide to be effective (especially when the tax havens that are scattered about everywhere are at stake, and when a few legislative failures continue - the last was last week in Switzerland).
But the revision of the banking world and the battle against tax fraud are making progress. At the same time, new legal proceedings are being opened against past abuse (see yesterday's edition of EUROPE). We shouldn't wait for a D-Day when we will notice that everything has been resolved. But already the number of banks that base their advertising on transparency is growing. We're making progress.
(FR/transl.fl)